Calculate salary after inflation
Enter your current salary, inflation rate and number of years. You can also enter a proposed new salary to see whether it increases or decreases spending power in real terms.
How the salary inflation calculator works
Inflation reduces spending power because the same salary buys less when prices rise. This calculator compounds the inflation rate over the number of years entered, then estimates the salary needed to keep pace.
If you enter a proposed salary, the calculator compares it with the inflation-adjusted salary needed. This helps show whether a pay rise is a real-terms increase or a real-terms decrease.
salary needed = current salary × (1 + inflation rate) ^ years
increase needed = salary needed - current salary
real-terms change =
((new salary ÷ current salary) ÷ inflation factor) - 1
What real-terms pay means
A pay rise can look positive in cash terms but still be negative in real terms. For example, if your salary rises by 3% while prices rise by 5%, your pay has increased on paper but your spending power may have fallen.
A real-terms pay increase means your salary rose by more than inflation. A real-terms pay decrease means your salary rose by less than inflation, stayed flat while prices rose, or fell outright.
Got a specific pay rise?
Use the pay rise calculator to work from a percentage, fixed increase or new salary.
Example salary inflation calculations
These examples show the gross salary needed to keep pace with inflation before tax and deductions.
| Current salary | Inflation | Years | Salary needed | Increase needed |
|---|---|---|---|---|
| £30,000 | 4% | 1 | £31,200 | £1,200 |
| £40,000 | 3% | 2 | £42,436 | £2,436 |
| £35,000 | 5% | 1 | £36,750 | £1,750 |
Inflation and take-home pay
This calculator compares gross salary with inflation. Your actual spending money depends on net pay after Income Tax, National Insurance, pension, student loan deductions and other payroll deductions.
If a pay rise pushes income into a higher tax band or increases student loan deductions, your take-home increase can be smaller than the gross increase shown here.
Check after-tax salary
Use the take-home pay calculator to estimate monthly net pay from your new salary.
When to use this calculator
- Annual pay reviews: check whether a proposed increase keeps up with inflation.
- Job offers: compare a new salary with the income needed to maintain spending power.
- Negotiation: show the salary needed to avoid a real-terms pay cut.
- Multi-year freezes: estimate how much salary would be needed after several years of inflation.
- Budgeting: understand why higher bills can make the same salary feel smaller.
Related salary glossary terms
These terms help explain pay, inflation and spending-power comparisons.
Salary inflation FAQs
Is this a cost of living calculator?
It is a simple salary and inflation comparison. It does not model your personal basket of spending, rent, mortgage, bills or household costs.
Does inflation compound over multiple years?
Yes. The calculator compounds the inflation rate over the number of years entered, so a 3% rate over 2 years is more than a simple 6% increase.
Can I use negative inflation?
Yes. A negative inflation rate can be entered to model deflation, although most salary reviews use a positive inflation comparison.
Does this include tax?
No. It compares gross salary with inflation. Use the take-home pay calculator to estimate after-tax monthly pay.